Prime Minister John Key says he will raise with his Australian counterpart the issue of two major Australian supermarket chains running an aggressive Buy Australia campaign.

The supermarkets are systematically stripping their shelves of New Zealand-produced goods sold under their "house brand" labels, threatening hundreds of millions of dollars worth of New Zealand exports.

Frozen foods, cheese and fresh vegetables are among the goods affected and cereals may also be on the hit list.

Key said it was "undetermined yet whether it is a breach of the Closer Economics Relations (CER) trade pact.

"But whether it is legal or not it's arguably in my view a breach of the CER and we're going to raise that with (Prime Minister) Tony Abott.

"It primarily affects things like food for instance so vegetables grown in New Zealand don't fit that criteria and therefore are sold through those supermarket chains as much as they otherwise would be.

"They do make exceptions but otherwise are generally not sold as much so whether that is legal or not is a matter that we are looking more closely at," he said.

They were private sector companies that also operate this side of the Tasman.

But in Sydney this week he would make the point the whole spirit of CER was an integrated Australasian market. Companies in Australia should observe that.

"We can always retaliate but their market is five or six times bigger than ours so that doesn't help us much."

Countdown did the same thing here "but not to the same degree".

Australian competition authorities were doing a review themselves of a number of issues related to this area.

Buy NZ Made has waded into the stoush over Australian supermarkets refusing to stock New Zealand goods, calling the stance "disappointing".

The New Zealand campaign was at pains to point out its position was different.

The non-government organisation promotes the manufacturing, exporting and retailing of New Zealand-made goods by encouraging consumers to buy New Zealand-made products.

"We have no intention of taking a protectionist stance by suggesting that people avoid products that aren't New Zealand-made, spokesman Scott Willson said.

"Consumers can buy things that aren't made here if they wish.

"What we do promote is that we make a lot of great products in New Zealand, our businesspeople are world-class and we should be very proud of that.

"It's therefore disappointing to see the Buy Australia campaign using such aggressive tactics against our producers."

It is understood the Government has received advice the move could be in breach of the decades-old Closer Economic Relations agreement with Australia.

One option would be for the Government to lodge a formal objection but sources say the situation is complicated because CER is a government-to-government agreement, and it is not "straightforward" whether supermarkets are captured by that process.